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Mar 20

Managing Investments During the Coronavirus Market Drop with Christina Worley, CPA/PFS, CFP®, CFA

Reading Time: 3 mins

In addition to the tolls it is taking on human lives, the coronavirus is sickening GDP growth. Forecasts from Kiplinger are slating economic growth to be cut in half, falling to somewhere near 1.6% this year.

To help pull some insight from financial planners who are experienced in helping clients understand their investment options, we reached out to Christina Worley, CPA/PFS, CFP®, CFA, the Founder and Managing Member of Castle Wealth Management in West Palm Beach, FL.


Here are some questions from our interview:


Lots of investment-related panic is surrounding coronavirus. What advice are you giving your clients?

Don’t panic. Your asset allocation should reflect your goals and values so you’ll want to stick to it. If you are not close to retirement, you want to ride out the market correction and buy into the dip if you have available cash. 

Or, you can also take this opportunity to do strategic tax loss harvesting in non-retirement accounts, and sell out of stocks that you don’t like any more but couldn’t sell previously because they had run up in value and the capital gains tax would have been too high.

Just remember that market corrections are normal and to be expected. This is a particularly severe decline, but it doesn’t change the fact that panic selling rarely pays off. Don’t make any hasty moves and stick to your financial plan.


What’s one of the biggest mistakes investors make during market dips?

Panicking during market declines and being impatient or impulsive is one of the biggest mistakes we coach our clients on. When the market drops, many people panic and sell out at a time they should be holding firm so they don’t miss out on the recovery.

If you can’t resist getting out of equities, consider switching into some of the equity funds such as the Innovator ETFs, among other buffer funds, which limit downside losses. They are not good for multi-year holdings since they track the market index and don’t pay dividends, which would be appreciable over time. However, for the short term, investors are protected from major downside losses while participating in upside gains.


Should investment strategies differ for those who are close to retirement?

If you are close to retirement or are in retirement and need to withdraw from your portfolio to live, consider selling your fixed income investments until the equity market recovers.

Treasury bonds, corporate bonds, and preferred stocks pay a fixed interest rate over a specific period of time and generally hold more of their value when the stock market is declining. Therefore, they are a better option to sell for those who need cash in times of market dips.


Are there any investment opportunities that arise in times like these?

When the market dips, think about buying sectors that people are selling out of because of fear, especially those in energy or banking that pay a high yield. 


How can people calm their emotions during downturns?

To calm emotions, we encourage people to think through the plan they have in place and consider how much this downturn will actually affect their lives. The news cycle tends to focus on bad news, since it gets better ratings. Watching only bad news will tend to over activate individuals’ fear responses. 

If you can watch a more balanced presentation of the market’s long-term outlook, many individuals would rationally consider opportunities and probably make better long-term investing decisions. So please turn off the scary news after a reasonable update and don’t watch it all day long. 


About Christina Worley, CPA/PFS, CFP®, CFA

Christina Worley is the Founder and Managing Member of Castle Wealth Management. Under Ms. Worley’s guidance, Castle Wealth Management has grown since 1997 to become an established, fee-only fiduciary provider of wealth management services with approximately $350 million of assets under management. Castle Wealth Management is the oldest woman-owned registered investment advisory firm in West Palm Beach, FL.


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